The Attorney General of Massachusetts announced Thursday that she is suing five of the nation’s largest banks. The banks have been charged with deceptive foreclosure practices, including “robo-signing” legal documents. The move could potentially undermine negotiations between the banks, state prosecutors and the White House.
Five banks named in suit
The lawsuit names Bank of America, Wells Fargo, JP Morgan Chase, Citigroup and GMAC. It claims the lenders used fraudulent paperwork, foreclosed without actually holding mortgages, corrupted records and failed to honor loan modification promises.
Attorney General Martha Coakley said:
“The single most important thing we can do to return to a healthy economy is to address this foreclosure crisis. Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law. Our action today seeks real accountability for the banks’ illegal behavior and real relief for homeowners.”
Coakley had been involved in settlement negotiations between the banks, a coalition of 50 state prosecutors and the Obama administration. The negotiations began in 2010 when it surfaced that the banks had used phony documents and electronically forged signatures — a.k.a. robo-signing — to foreclose on thousands of mortgages.
Talks have soured
The negotiations have hit many stumbling blocks and now may be at a standstill. California Attorney General Kamala Harris left the table in September, saying that the banks were not willing to provide enough relief for the homeowners. New York Attorney General Eric Schneiderman and Delaware Attorney General Beau Biden have also expressed dissatisfaction with Iowa Attorney General Tom Miller, who is leading the negotiations. They believe the relief he is seeking is too broad and lets the banks escape liability for much of their alleged illegal activity.
Coakley, in a conference call Thursday, said that Miller’s negotiations have not been adequate. “It’s taken too long and the signals we have received are that we won’t get relief that we seek,” she said.
New York AG offers support
Eric Schneiderman has expressed support for Coakley’s move. A spokesperson for his office said:
“Attorney General Schneiderman is encouraged by Attorney General Coakley’s action today and looks forward to their continued work to hold those responsible for the mortgage crisis accountable and provide meaningful relief to struggling homeowners.”
Miller responded in a statement that he hoped Coakley would return to the table and concentrate on the broader settlement he is negotiating.
“We’re optimistic that we’ll settle on terms that will be in the interests of Massachusetts,” Miller said.
Huffington Post: http://www.huffingtonpost.com/2011/12/01/massachusetts-ag-foreclosure-lawsuit-banks_n_1123393.html
Washington Post: http://www.washingtonpost.com/business/massachusetts-attorney-general-sues-5-banks-for-unlawful-foreclosure-practices/2011/12/01/gIQAYOf4GO_story.html?tid=pm_business_pop
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